The acting commissioner of the state banking department commended lenders convened at a symposium in Manalapan today for the way they reached out to their customers in the aftermath of Sandy.

"Banks without power were setting up folding tables in their parking lots to service their customers, and that says a world about you as individuals and residents of New Jersey," said Kenneth E. Kobylowski, who traveled around the state in the storm's aftermath. "What we hear is that businesses are feeling uncertainty, and banks are not immune to the general economic uncertainty out there."

Additionally, Kobylowski said, "We are also hearing that businesses — your customers — are not borrowing as much as we would all hope because of that uncertainty" related to the so-called fiscal cliff. And he said with interest rates so low, businesses are earning so little return on their bank deposits that they are investing their own capital in their businesses, instead of borrowing.

A major issue facing banks is regulation; the increased capital requirements under Basel III, which were supposed to begin phasing in Jan. 1, are most critical. Regulators announced several weeks ago that the implementation would be delayed.

"I guess we can take some small comfort in the fact that the regulators have announced they would indefinitely delay Basel III, based on the 2,000 comment letters they received. Your voice was heard, and you should be commended," he said.

And, he added, "We hear all the time that the costs of complying with Dodd Frank is staggering." He cited a report by JP Morgan Chase that the bank "has 3,000 people who do nothing but compliance, and expects to spend $3 billion on compliance costs.

"Obviously, no community bank can handle that burden. It is absolutely ridiculous and we are working with you to address those concerns."

Also at the symposium, John Ryan, president of the Conference of State Bank Supervisors, said his organization will continue to make the case that community banks are critical to the success of the U.S. economy.

"The diversity we still have in the (financial) system is still very relevant," he said. He said community banking is about "relationship banking and the connection between senior-level decision makers and their communities, to make possible business formation and consumer access to credit."

He pointed out that community bankers are closely connected to the local economy: "It is not as though you can cash out and become CEO of some other bank. You are deeply connected to the fate of yourinstitution. The community bank business model has proved itself again and again: you make decisions that sustain the institution, the community, the businesses and the consumer, and this is a great public benefit. We need that access to credit and job growth, and we need the flexibility that relationship banking provides to our economy."

He said what is needed is more research "that focuses on what community institutions and midsize institutions mean to economy vitality: what they mean to jobs and small businesses." He told the bankers, "You are there, front and center, and everything you do has a direct impact on the real economy."